Dollar bulls wary after biggest weekly drop in two months

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The dollar steadied on Monday after posting its biggest weekly drop in two months last week as investors grew cautious about the near term outlook for the greenback after dovish comments by U.S. policymakers.

Against a basket of its rivals, the greenback was broadly steady at 96.48 after falling nearly half a percent last week, its biggest weekly drop since late September.

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The dollar has been the surprise winner of 2018, having risen nearly 10 percent from April lows thanks to a combination of interest rate hikes and strong data. But the growing view that U.S. economic growth may have peaked has begun to eat away at these gains.

“Dovish Fed comments on Friday gave some encouragement to investors to take profits on dollar positions which have risen in recent weeks,” said Jane Foley, head of FX strategy at Rabobank based in London.

Richard Clarida, the Fed’s newly appointed vice chair, cautioned about a slowdown in global growth, saying “that’s something that is going to be relevant” for the outlook for the U.S. economy.

Federal Reserve Bank of Dallas President Robert Kaplan, in a separate interview with Fox Business, also said he is seeing a growth slowdown in Europe and China.

Their comments come at a time when long dollar positions have swelled to their biggest levels in nearly two years despite a modest decline last week, according to futures data.

Latest U.S. Treasury holdings data also weighed on the dollar. China and Japan, the two biggest foreign U.S. creditors, cut their U.S. Treasury holdings further in September as foreign appetite for Treasuries declined.

Despite the dollar’s weakness, the euro failed to rally significantly above the $1.14 levels as concerns over negotiations between Brussels and Rome over Italy’s budget plans sapped broader appetite. It was changing hands at $1.1422.

Elsewhere, sterling remained in the spotlight with the currency expected to remain under pressure until the market gets more clarity on the progress of the Brexit deal.

It was 0.2 percent firmer against the dollar at $1.2864 after a 1 percent drop last week as British Prime Minister Theresa May’s draft EU divorce deal has met with stiff opposition with several ministers resigning.

bit coinBitcoin sinks to new 13-month low

LONDON (Reuters) – Bitcoin slumped to a new 13-month low on Monday, with the biggest cryptocurrency touching $5173.23 on the Bitstamp platform BTC=BTSP.

Bitcoin was last down 5.2 percent at $5270. The cryptocurrency, and other lesser coins including ethereum and XRP, endured a sell-off last week, with some blaming fears that a “hard fork” in bitcoin cash, where the smaller coin that split into two separate currencies, could destabilize others.

Joey Logano wins Homestead finale to score first NASCAR Cup championship

Logano didn’t need to nudge defending series champion Martin Truex Jr. like he did to earn a spot among the Championship 4 last month. Logano just sped past Truex with 11 laps left in Sunday’s Ford EcoBoost 400 to claim both the race win and the championship at Homestead-Miami Speedway.

“It’s an amazing night,” Logano said. “I know what second felt like, and I know how much it stinks. I didn’t know what winning felt like, but it feels really, really good.”

Logano finished second to seven-time champion Jimmie Johnson in 2016 after a fourth-place finish in the finale two years ago and, before Sunday, Logano hadn’t finished any higher at this 1.5-mile track in nine previous starts.

Still, Logano declared himself the favorite after bumping Truex at Martinsville — even if he didn’t have a title like the other three Championship 4 drivers (Truex, Kevin Harvick and Kyle Busch). Those three also were each seeking a second Cup title.

“You can’t just be confident and say it because then it’s just kind of BS, right?” Logano said. “You have to believe it inside.

“When you put yourself in high-pressure situations, you find more out of yourself. I think that move at the end of the race shows it. You refuse to lose. You really do.”

he Championship 4 contenders were the class of the field at Homestead and finished 1-2-3-4. Truex held on for second; Harvick, the 2014 champion, came home third; and Busch, the 2015 champ, finished fourth.

Busch, after a couple of missteps earlier in the race, rebounded on the final pit stop as the leaders came in when Daniel Suarez was spun out with 20 laps left. Busch had been holding out for a yellow because he was on s different pit strategy than the leaders.

“I was optimistic about it but didn’t think it would be that short-lived,” Busch said. “I figured I could at least maybe lead three or four laps, but Martin got a good restart.”

Truex raced for the final time with Furniture Row Racing, which announced in September it would cease operations at season’s end. Truex will drive the No. 19 Toyota next year and team with Busch’s Joe Gibbs Racing.

After he passed Busch on the final restart, it looked like Truex could send off the one-car Denver-based operation with another celebration before Logano made the pass with 11 laps left.

“Just didn’t play out the way we needed it to,” Truex said. “I had nothing for him at the end. I needed 15, 20 more laps, and that’s just the way it goes. I’m not sure what else to say.”

Logano said he was thinking Truex could get him back for Martinsville as he passed him.

“Well, you never know,” Logano said. “He raced me hard. He raced me the same way that I would have raced him. We ran each other hard and tried to, but there was nothing dirty.”

Brad Keselowski finished fifth, Matt Kenseth sixth, Chase Elliott seventh, Clint Bowyer eighth, Aric Almirola ninth and Kurt Busch 10th.

The first caution of the weekend not counting the yellow flags after stages came on lap 139 for debris. Neither Friday’s Camping World Truck Series nor Saturday’s Xfinity Series races had “natural” cautions.

The second came after Kyle Larson clipped the wall in turn 4 with 75 laps left. Larson was third at the time and led the most laps (45) than any driver not in the Championship 4.

Kyle Buch’s crew — one of the most dominant this season — had its second miscue of the race as the air gun got caught under the car during the caution for Larson. That cost Busch four spots. Earlier in the race, a tire changer dropped a lug nut.

Harvick raced minus his crew chief Rodney Childers and car chief Robert Smith, who were suspended for the final two races of the season after NASCAR found Harvick’s No. 4 Stewart-Haas Racing Ford had an illegal spoiler after a victory at Texas Motor Speedway on Nov. 4.

Stocks turn mixed, dollar faces rate hike uncertainty

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SYDNEY (Reuters) – Share markets turned mixed in Asia on Monday amid conflicting signals on the prospects for a truce in the Sino-U.S. trade dispute, while the Federal Reserve’s newly-found concerns over the global economy constrained the dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan dithered either side of flat through a sluggish session. Chinese blue chips manage to add 0.5 percent, as did Japan’s Nikkei.

But E-Mini futures for the S&P 500 slipped 0.36 percent and spread betters pointed to modest opening losses for the major European bourses.

Wall Street had firmed on Friday after U.S. President Donald Trump said that he may not impose more tariffs on Chinese goods after Beijing sent a list of measures it was willing to take to resolve trade tensions.

The comment stoked speculation of a deal when Trump meets Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina later this month.

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However, Sino-U.S. tensions were clearly on display at an APEC meeting in Papua New Guinea over the weekend, where leaders failed to agree on a communique for the first time ever.

U.S. Vice President Mike Pence said in a blunt speech that there would be no end to U.S. tariffs on $250 billion of Chinese goods until China changed its ways.

“The comments from Trump were seen as offering a glimmer of hope that further tariff action could be held in abeyance,” said NAB’s head of FX strategy, Ray Attrill.

“The exchange of barbs between Pence and Chinese President Xi Jinping in PNG on the weekend continues to suggest this is unlikely.”

SENSING A FED SHIFT
Also uncertain was the outlook for U.S. interest rates.

Federal Reserve policymakers are still signaling rate increases ahead but also sounded more concerned about a potential global slowdown, leading markets to suspect the tightening cycle may not have much further to run.

“Fed officials are having an easier time showing a slightly less hawkish leaning by noting the emerging global slowdown,” said Deutsche Bank’s macro strategist Alan Ruskin.

“It’s undercutting expectations of rate hikes moving above ‘neutral’,” which the Fed has nominated as between 2.5 and 3 percent. “This shift in tone is subtle, but fits with the more bullish bond market tone of late, and is starting to have a material impact on the dollar.”

That will focus attention on an appearance by New York Fed President John Williams later on Monday to see if he echoes the same theme.

Investors have already lengthened the odds on further hikes, with a December move now priced at 73 percent, down from over 90 percent. Futures imply rates around 2.74 percent for the end of next year, compared to 2.93 percent early this month. <0#FF:>

Yields on U.S. 10-year paper have duly declined to 3.06 percent, from a recent top of 3.25 percent.

The dollar followed to hover at 96.509 against a basket of currencies, down from a peak of 97.693. The euro was parked at $1.1400, while the dollar backed off to 112.72 yen.

Sterling remained vulnerable at $1.2826 after political turmoil over Brexit caused steep losses last week.

British Prime Minister Theresa May said on Sunday that toppling her would risk delaying Brexit as she faces the possibility of a leadership challenge from within her own party.

With both pro-EU and pro-Brexit lawmakers unhappy with the draft agreement, it is not clear she will be able to win the backing of parliament, raising the risk Britain leaves the EU without a deal.

In commodity markets, gold found support from the drop in the dollar and held at $1,1220.19.